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Background Paper on Issues Related to Land Economics

Author

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  • Jatinder S. Bedi

    (National Council of Applied Economic Research, New Delhi)

Abstract

The mechanism adopted to keep the rise in property prices under check until 2000 was the active participation of the public sector in keeping supply ahead of demand. This seems to have worked well in keeping property prices under control and meeting the housing requirements of the middle and high-income groups living in NCT Delhi. The EWS and lower income stratum, however, faced a shortage. This, along with flexibility in unauthorised construction regarding plot size, etc., explains the huge growth in unauthorised construction. After 2000, the DDA took a deliberate decision to abstain from any major land development process and thus builders took full advantage of it by converting single-storey houses into multi-storey buildings. Though the supply of houses during 2001-11 increased at a steeper rate than in 1991-2001 while the population increase in NCT Delhi was lower than in 1991-01 because other NCR regions also got developed during the latter period at a much faster pace, the supply management was done by these players in such a manner that the price of property rose manifold. The easy and concessional availability of loans for housing, coupled with tax incentives to homebuyers and aggressive initiatives by the public sector to improve infrastructure such as metro and road transportation, encouraged final users to purchase houses even at extraordinarily high prices and served as a bonanza for vested interest groups that collaborated to hike prices. Despite the big push that the private sector might have provided to the development process, the public sector should not have withheld from ensuring that rules of free and fair market mechanism were not broken especially because land, transport and other facilities were provided to builders (allowed to be acquired) at rates much below the market rate keeping in mind the importance of providing housing to the masses in order to improve social welfare. It is, therefore, surprising that after such an experience the supply control for future development has been handed over to builders through the land pooling policy scheme. The massive expansion plans during 2011-21 over and above the excessive supply created compared to expansion in the number of households during 2001-11 is likely to considerably ease property prices, but not before the major portion of the agreed amount is received from customers by the builders regarding their major housing and commercial projects currently underway. There, however, would always be a shortage in certain segments in which purchasing power is low.

Suggested Citation

  • Jatinder S. Bedi, 2014. "Background Paper on Issues Related to Land Economics," NCAER Working Papers 105, National Council of Applied Economic Research.
  • Handle: RePEc:nca:ncaerw:105
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    File URL: https://www.ncaer.org/publication/background-paper-on-issues-related-to-land-economics
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    Citations

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    Cited by:

    1. Jain, Manisha & Korzhenevych, Artem & Pallagst, Karina, 2019. "Assessing growth management strategy: A case study of the largest rural-urban region in India," Land Use Policy, Elsevier, vol. 81(C), pages 1-12.
    2. Gupta, Ashish & Tiwari, Piyush, 2022. "An analysis of land and property development models, and stakeholders: A case of National Capital Region, India," Land Use Policy, Elsevier, vol. 117(C).

    More about this item

    Keywords

    Housing Price; Land Development; Land Use Regulation; Urban Housing; Urbanisation;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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